Chile’s Central Workers Union, an umbrella organization consisting of several labor unions, launched a 2-day national strike Wednesday morning, supported by protesting students and the opposition Concertación coalition.

While the organizers insist the strike and its accompanying public protests are peaceful, fringe groups collided with police on Wednesday shortly after the strike began. Protesters in the capital of Santiago stoned buses and police responded with tear gas and water cannons. At least 18 flaming barricades were set up by protesters in the capital of Santiago and clashes between police and demonstrators occurred in Valparaíso and Concepción.

“We don’t want violence, our fight is not versus the police or to destroy commercial shops … our fight is to recover the right to education, on that we have been emphatic and clear,” said student leader Camila Vallejo.

The protests, which began in May of this year with students asking for educational reforms, have broadened to include demands ranging from a new constitution to a revamped tax system. The 48-hour strike is the first of its kind since the since the fall of a 27-year dictatorship in 1990.

To avoid a runoff, the winning candidate in October must get at least 45 percent of the vote, or at least 40 percent with a lead of 10 points or more over the closest contender. Early results in the primary indicated that Mrs. Kirchner, 58, had handily exceeded those thresholds, winning 49 percent of the vote. Ricardo Alfonsín of the centrist Radical Civic Union Party was second with 13 percent of the votes, while a former president, Eduardo Duhalde of a conservative faction of the Peronist Party, was third, with 12 percent.

Voting was mandatory, and people could cast their ballot for any candidate regardless of party affiliation. (continue reading… )

It began on August 4th with the metallic clink of a few pots and pans. By nightfall, thousands of people were on the streets of Santiago banging kitchenware, a form of protest last heard under the dictatorship of General Pinochet. This time the cacerolazos, as they are called, are being staged in the name of educational Utopia—and in response to a cack-handed government ban on marches.

Chile’s school system is the least bad in Latin America, according to the OECD’s PISA tests, which compare educational attainment across countries. But that does not make it good. And the overall performance hides huge disparities. Analysis done in Chile of the test results in the 65 countries that took part finds that it ranked 64th in terms of the variance of the results according to social class. Rich pupils get good private education; poor ones are condemned to underfunded, dilapidated state-funded schools.

This “educational apartheid” as Mario Waissbluth, a campaigner, puts it, is widely blamed for the fact that Chile remains a highly unequal society, despite its dramatic progress over the past quarter of a century in reducing poverty. “The kids from the posh suburbs study in those suburbs, go to university in those suburbs, get jobs as company executives in those suburbs and employ friends from the schools they went to themselves,” says Mr Waissbluth.

The centre-right government of President Sebastián Piñera agrees. Chile inherited from the dictatorship a voucher system under which the government pays money to the school of the parents’ choice. In November the government unveiled a plan to increase the value of the voucher, especially for the poorest children. As well as trying to attract better teachers to state schools, the government will set up 60 lycée-style “schools of excellence” aimed at bright children from poor families.

Students and teachers responded by demanding the abolition of all for-profit education. After they staged big marches along the Alameda, Santiago’s main thoroughfare, Mr Piñera last month sacked his unpopular education minister. The government also said it would draw some $4 billion from its reserve fund of windfall copper revenue to pay for better schools. (continue reading… )

Argentina believes it has closed the chapter on its $100bn sovereign default in 2001 after two debt swaps, in 2005 and 2010, which have restructured more than 92 per cent of the defaulted bonds.

It says the two take-it-or-leave-it offers prove its good faith in the matter, and has vowed not to negotiate or settle with the remaining “holdouts” – especially so-called “vulture” funds which are among those to have been pursuing it through US courts.

But a new avenue of litigation has been opened with a 283-page decision last week by the World Bank’s arbitration tribunal, ICSID, which has not yet been made public, that it is competent to hear a claim for more than $1bn brought by some 60,000 jilted Italian bondholders.

Represented by global law firm White & Case, the Italian bondholders say Argentina is accountable under a bilateral investment protection treaty. The World Bank’s International Centre for the Settlement of Investment Disputes ruled on August 4 that it was competent to hear the case. (continue reading… )

The leaders of widespread student and faculty protests in Chile yesterday announced plans to mount a national strike and an additional series of mass demonstrations to contest a far-reaching education reform bill supported by the government. In response, Chilean Interior Minister Rodrigo Hinzpeter indicated that his office would deny to students permission to demonstrate in downtown Santiago where prior confrontations with police have caused significant property damage: “The march will not be approved by our government due to the damage caused to property, bystanders and police. We will take all necessary measures to enforce the decision. It is time for the demonstrations to end.”

According to student leaders, the government’s proposed education reforms would allow for excessive levels of privatization in the education sector and lead to higher levels of indebtedness among graduates. “We analyzed the ministry’s proposal and students considered it a setback because it allows profit in the education sector. We do not see any structural changes, but only further privatization and perpetuation of student debt,” said Univeridad Católica de Valparaíso official Nataly Espinoza.

Chile has long struggled with education reform initiatives and these latest demonstrations are the culmination of more than two months of smaller protests across Chile. Students are calling for a halt of the trend toward privatization in education and other basic services such as public transportation.

Despite all the dynamism of the last decade, bilateral trade in 2010 accounted for only 0.7% of the total trade of both countries, well below the already modest 20% share intraregional trade in Latin America.

The study’s lead author, Mauricio Mesquita, told beyondbrics the slow progress was due in large part to Brazil’s reluctance to lower tariffs. This year, as part of a 15-year tariff reduction deal, the average preferential tariff on Colombian exports to Brazil was 5.8 per cent, while Brazil’s was 2.4 per cent. Other factors – including a significant infrastructure deficit in the Amazon region and high logistics costs – have also contributed to the low level of trade between the two countries.

Stiff competition from Chinese manufacturers should also strengthen the case for boosting internal markets, the report notes. (continue reading… )

The major Latin America economies have been among the key engines of global growth as advanced economies continue to languish, but their success is creating policy challenges unlike any the countries have ever faced in modern times. Solid fundamentals and foreign investors in search of yield have generated massive capital flows, and brought with it currency appreciation and inflation pressures. How are they trying to deal with it and are their responses working?

This will be the main topic to be discussed on the upcoming webinar on August 30th at 4pm (ET).

Heather Scott, Washington DC Bureau Chief of International News (MNI) will be the presenter. Feel free to register at http://marketnews.webex.com

About the Presenter
Heather Scott is MNI’s Washington DC Deputy Bureau Chief of International News. Heather created and coordinates MNI’s coverage of the major economies in Latin America. After building a network of reporters in the region, she pioneered the LatamWatch report which every Monday previews upcoming top developments in Mexico, Brazil and Argentina. Follow Heather on Twitter: www.twitter.com/MNILatamWatch

Market News International (MNI) provides news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets.

Cuban head of state Raúl Castro surprised observers Monday by announcing the possibility reforming the island’s restrictive immigration laws. Cuba remains one of the few countries that requires its citizens to apply for permission to leave. Castro said the rule made sense in the 1960s when the revolutionary government adopted it as a way to protect itself from hostile political exiles, but did not make sense today, given that most Cuban migrants leave for economic reasons. Castro has previously indicated intentions of reforming a state-dominated economy that has grown sluggishly since the onset of the worldwide recession in 2008, posting GDP growth of 1.4 percent in 2009 and 1.5 percent in 2010. While the possibility of immigration reform stole the show at Monday’s day-long congressional session, the National Assembly did not publicly address Cuba’s many pressing economic challenges.

Some observers expected the Cuban Parliament to finalize game-changing rules permitting home sales at its Monday meeting for the first time since the 1960s. The body did not do so. Despite putting the task off, the Cuban government says it will finish crafting rules governing home sales by the end of the year. Even without the law on their side, The Miami Herald points out that Cubans have already begun advertising their homes on Revolico—a website for classified announcements. And foreigners may soon get the right to buy Cuban property. Canadian company Standing Feather International, which has a contract to build a luxury golf resort in Holguín, says the Cuban government will allow both foreigners and nationals to purchase property there in perpetuity. Previously, foreigners could only lease Cuban property for 50 years, a ceiling Raúl Castro raised to 99 years in September of last year.

Cuba is also struggling just to feed itself. In preparation for Monday’s legislative meeting, Minister of Agriculture Gustavo Rodríguez announced Friday that the government would have to import even more food this year than planned, because the state failed to produce as much as it anticipated in 11 categories of foodstuffs during the first six months of 2011. It was the second time this year the government was forced to bump up its outlay for foreign food purchases. Costs continue to mount despite a 2009 agricultural reform that distributed usufruct rights to 150,000 families to farm fallow land. BBC correspondent Fernando Ravsberg says the reform has yet to boost production because it does not address the main problem of lack of access to basic resources such as fertilizers, tools, seeds, tractors, and other inputs. Cuba imports somewhere between 60 percent and 80 percent of its food (official and private estimates vary widely). (continue reading… )

The conventional Guatemalan security story is one of a country riddled with violence, where law enforcement institutions are in shambles and corruption reaches the highest levels of government. Its homicide rate triples that of Mexico, and its notoriously weak rule of law system lets more than 99 percent of criminals walk free. The growing presence of Mexican and Colombian cartels, pushed out of their home countries due to intensive antidrug campaigns, has only made matters worse. As the Zetas in particular move into the northern provinces, observers sound alarm bells about Guatemala’s possible descent into a “narco-state”.

Still, it may be too early to give up on Guatemala. Since the capture of top drug-smuggler Juan Alberto Ortiz-López, alias ‘el Chamalé’, in late March of this year, Guatemalan officials have arrested a number of local gang leaders, some with close ties to the Zetas. Within days of folk singer Facundo Cabral’s murder this month, the authorities announced the arrest of three suspects, presenting a slideshow with a play-by-play rundown of the events. The swift response became a point of pride for Guatemalans accustomed to sluggish, if any, justice.

The UN International Commission against Impunity in Guatemala (CICIG) can take much of the credit for these improvements. Set up in 2007, the commission has been an enormous boost to law enforcement’s (still limited) capacity; assisting in high-profile investigations and promoting important reforms, notably witness protection and plea bargaining laws. It works in conjunction with domestic security agencies, employing a “learning by doing” model that teaches investigative methods to Guatemalan prosecutors on the job. Not least of all, CICIG played an instrumental role in the appointment of current Attorney General Claudia Paz y Paz, who has had a markedly positive impact on the public prosecutor’s office. (continue reading… )

After a bomb exploded in the southern province of Cauca last month, local leaders issued a statement urging both the Colombian government and guerrillas to disarm and leave their communities in peace.

On most days Toribio can be described as a sleepy farming town of 4,000. Life revolves around the leafy central square, especially on Saturdays when farmers flock to the market to sell their produce. In recent years the town has been left in relative peace despite conflict raging between guerrillas and the Colombian government in the southern province of Cauca.

That changed on Saturday, July 9.

Like most Saturdays, Sara Munoz was at the bank to deposit money when she heard an explosion outside. She recalls the roof falling down around her, trapping her with her three children. Her father was running their meat stall in the busy market outside and was killed instantly as a gas cylinder from the homemade bomb hit his head. FARC guerrillas, who have waged civil war with the state since the 1950s, had detonated a car bomb outside the police station. While the police station was left intact, 25 homes were destroyed, nearly 500 damaged, and three civilians were killed with hundreds of others injured.

“Many innocent and good people are being caught up in a conflict we have nothing to do with,” Ms. Munoz said from her mother’s home, a week after the blasts.

While urban Colombia has seen a dramatic decline in politically-motivated violence in the past decade, in recent months the government has increased its military presence here in rural Cauca in order to flush FARC rebels out of strategic mountains where they are believed to be hiding key leaders. Countering the offensive, the FARC have increased bombings, attacks, and assassinations with little care for the native population, say the indigenous leaders who also criticize the Colombian military for establishing bases inside their towns. Colombian think-tank Nuevo Arco Iris has reported a 10 percent increase in attacks for the first half of this year by the FARC compared to the same period last year.

Fed up with innocent bloodshed, Colombian indigenous communities from Cauca have now called on all military groups to leave their territories and put an end to the violence coming from both sides. The demand was made by indigenous leaders following a meeting on July 20 with over 5,000 natives from neighbouring reserves, to find a solution to surging violence in their territory. They have also requested that the government and FARC begin a peace dialogue to end the conflict. (continue reading… )

Toribio, ColombiaOn most days Toribio can be described as a sleepy farming town of 4,000. Life revolves around the leafy central square, especially on Saturdays when farmers flock to the market to sell their produce. In recent years the town has been left in relative peace despite conflict raging between guerrillas and the Colombian government in the southern province of Cauca.